SBA 7(a) Q&A
Short answer
For a partner buyout with an SBA 7(a) loan, the departing owner must entirely sever their relationship with the business, including any ownership, management, and financial ties, except for a possible seller note on full standby.
The SBA treats partner buyouts as a change of ownership. The departing owner cannot retain any ownership interest, board seats, or management role. Any seller note provided by the departing partner must be on full standby, meaning no payments (principal or interest) are made until the SBA loan is fully repaid, unless specific conditions for partial standby are met and approved.
If Partner A sells their 50% stake to Partner B using an SBA loan, Partner A must resign from all company positions, transfer all shares, and any seller note they provide to Partner B must be on full standby. They cannot remain as a consultant with an ongoing payment stream that acts like debt.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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